Securing a Nevada Reverse Mortgage

If you’re planning to retire in the state of Nevada, a Nevada reverse mortgage may provide you with the funds you need to live the best years of your life in comfort and financial security.  A reverse mortgage pays your own money back to you by turning your home equity into cash you can spend on day to day living expenses.

What is a reverse mortgage?

It’s easy to understand why many seniors have chosen to establish their retirement incomes through reverse mortgages in Nevada.  These loans truly operate in reverse.  Your lender becomes the owner of your home’s equity and makes payments to you in exchange for this ownership until the full amount of equity minus fees is reached.

How can reverse mortgage funds be used?

The money you receive through a reverse mortgage loan can be spent on anything.  You can reinvest it into a more liquid investment, pay for medical expenses, give a portion of it to relatives, make a down payment on a new home, or fulfill other debt obligations.  

What types of reverse mortgages exist?

Reverse mortgages have three forms:

• Goverment-insured: FHA HECM (Home Equity Conversion Mortgage).
• Single-purpose: backed by nonprofits or state or local government agencies. 
• Proprietary: backed by private entities.

The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.

Who can get a reverse mortgage?

Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor. 

What costs are associated with a reverse mortgage?

There are several costs associated with securing an HECM reverse mortgage in Nevada, including but not limited to:

• Upfront fees: include the lender's fees, and can be paid from the reverse mortgage funds. This means, however, that the money taken cannot be borrowed back. So a $200,000 reverse mortgage with $16,000 in fees paid via the reverse mortgage funds will leave the homeowner with $184,000. 
• Closing fees: include all the same fees required of a traditional mortgage closing. 
• Reverse mortgage counseling fees: HUD mandates all reverse mortgage homeowners attend reverse mortgage counseling. Fees are in the $100 range but can be waived for lower income seniors. 
• Mortgage insurance: an upfront mortgage insurance premium (MIP) must be paid for reverse mortgage borrowers. It can be as low as 0.5% and as high as 2.5% of the appraised home value, unless the home is over $625,500, in which case the upfront mortgage insurance is calculated by the lender. 

How will I receive my funds, and for how long?

This flexibility carries over into how you receive your money from your lender.  You can set up any of the following payout methods.

• Lump sum.
• Monthly installments.
• Credit line.
• A combination of any of the above.

Your lender will own your equity but not your home.  This is one of the best parts of getting a reverse mortgage.  You don’t have to give up your home to the bank in exchange for the money you need.  It’s just the opposite.  You get to continue living in your home until you pass away or choose to move, without making any mortgage payments at all.

Does the equity need to be repaid?

The funds will have to be paid back if you move, sell the home, or pass away. If you pass away, heirs will assume the reverse mortgage debt. Heirs can then sell the home to pay back the debt. They wil never have to pay back more than the home's sale value.

Nevada Reverse Mortgage Lenders

The part of the reverse mortgage process that will take the most time and effort on your part is the first step, which requires you to find a lender to work with.  This may seem simple, and it can be.  But if you want to find the best reverse mortgage lender around, you should conduct thorough research.

Meet with several lenders in your part of Nevada to discuss mortgage rates and fees on your new loan.  Each lender will offer you a different deal.  Your goal is to identify which lender can administer the loan in the most affordable way.  If you want more information on how to determine this, read our reverse mortgage checklist.

Nevada Senior Resources

Nevada Aging and Disability Services lists a number of programs designed to help seniors maintain a comfortable level of independence while still living at home. They include medicare, pharmacy, taxi assistance and more. Many programs are statewide, including populous cities like Henderson and Las Vegas. 

Lenders in: Nevada.